Globalstar GSAT Presentation Slides Kerrisdale

8/11/2019 Globalstar GSAT Presentation Slides Kerrisdale

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C ONFIDENTIAL I NVESTOR P RESENTATION

Short: Globalstar, Inc. (GSAT)October 2014 Kerrisdale Capital Management, LLC

1212 Avenue of the Americas, 3rd FloorNew York, NY 10036

Tel: 212.792.7999Fax: 212.531.6153

Email: [email protected]


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Legal Disclaimer

As of the date of this presentation, Kerrisdale Capital Management, LLC ( Kerrisdale ),other research contributors, and others with whom we have shared our research (theAuthors) have short positions in and may own option interests on the stock of theCompany covered herein (Globalstar, Inc.) and stand to realize gains in the event thatthe price of the stock declines. Following publication, the Authors may transact in thesecurities of the Company. The Authors have obtained all information herein fromsources they believe to be accurate and reliable. However, such information is presentedas is, without warranty of any kind whether express or implied and without any

representation as to the results obtained from its use. All expressions of opinion aresubject to change without notice, and the Authors do not undertake to update this reportor any information contained herein. This is not a recommendation to buy or sell anysecurity. Please read our full legal disclaimer at the end of our written report atkerr.co/globalstar.


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We Are Short Shares of Globalstar, Inc. (GSAT)

GSAT is the #4 largest Mobile Satellite Services (MSS) firm, selling voice and dataproducts in the niche market for satellite phones and similar devices

$3.6B market cap, $4.1B EV, ~$88mm LTM revenues

Only purported justification for outrageous valuation: TLPS / spectrum asset

Bulls believe that TLPS, upon approval, will be worth billions of dollars. The reality isthat TLPS, upon approval, will be worthless:

TLPS merely provides one additional licensable channel in 2.4GHz, when there are already

25 channels available for free, such that any network engineer using modern technology andbest practices can solve co- channel interference, or Wi -Fi congestion, in even the highest -density environments

TLPS will never be commercially viable, and the concept has been dismissed by virtuallyevery subject- matter expert weve spoken with

Outside of TLPS, Globalstars spectrum is worthless, due to specific characteristics

unique to GSATs frequencies GSAT is deeply indebted and will likely violate its financial covenants

Kerrisdale estimates an equity FV of $0, or 100% downside


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Page 3

An Incredible Rally Driven by Spectrum Hype

GSAT share price up 856% over the last 18 months

Complex capital structure obscures actual valuation

Investors have already valued GSATs spectrum at ~$4B

1. Due no later than 12/31/17. See 2013 10-K, p. 63.2. Includes restricted cash in the debt service reserve account under the COFACE facility.

Share price 3.01$Fully diluted shares (mm):

Shares O/S, 2014 Q2:Voting 764.0 Nonvoting 209.0

Subtotal 973.0 Dilutive effects:

Subordinated loan 111.1

Convertible notes 51.7 Warrants 44.1 Stock options 5.6

Subtotal 212.5 Fully diluted shares 1,185.5

Fully dilute d ma rket ca p 3,568.3$Non-convertible debt:

COFACE facility 586.3$Restructuring fees payable 1 20.8

Gross debt 607.1$Less: cash 2 (61.7)

Net debt 545.4$Total enterprise value 4,113.8$


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A Brief Review of GSATs History

1993: founded

1995: first IPO2002: Chapter 11 bankruptcy

2004: emerges from bankruptcy

2006: second IPO

2007: announces first of many significant satellite malfunctions

2012: delisted from NASDAQ2013: defaults on 5.75% Convertible Senior Notes (but obtained forbearance andultimately refinanced capital structure)

2013 10-K notes material weakness in internal control

2014: relisted on NYSE MKT

Cumulative 2004-13 financial results: op. income $(418)mm; FCF $(1.3)B

GSAT has a long track record of financial distress and operational weakness


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GSAT: Highly Levered, No Earnings

GSAT has been in dire straits for years

GSAT 10-Year Performance Summary ($mm ) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 TotalRevenue $84.4 $127.1 $136.7 $98.4 $86.1 $64.3 $67.9 $72.8 $76.3 $82.7 $896.7Op. income (3.5) 21.9 15.7 (24.6) (57.7) (53.8) (59.8) (73.2) (95.0) (87.4) (417.5)

Adj. EBITDA 3.6 27.3 33.8 21.8 (14.2) (12.6) (8.5) (6.4) 9.8 11.9 66.5

CF from ops 14.6 13.7 14.6 (7.7) (30.6) (18.4) (23.3) (5.5) 6.9 (6.5) (42.3)Less: capex 4.0 9.9 107.5 170.0 286.1 324.1 208.4 88.2 57.5 45.3 1,301.0Levered FCF 10.6 3.8 (93.0) (177.7) (316.7) (342.5) (231.7) (93.7) (50.6) (51.8) (1,343.3)

End of periodDebt @ book $3.3 $0.6 $0.4 $50.0 $238.3 $463.6 $664.5 $723.9 $751.0 $669.3Stock price $13.91 $8.00 $0.20 $0.87 $1.45 $0.54 $0.31 $1.75Shares O/S 72.5 83.7 136.6 291.1 310.0 353.1 489.1 844.9


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GSAT and Its Spectrum: An Introduction


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Spectrum 101: Some of the Basics

Wireless communications use specific chunks, or bands, of electromagneticspectrum to send signals

Spectrum utilized by a variety of users, including radar, GPS, TV broadcasting, etc.Frequencies expressed in millions or billions of cycles per second (MHz or GHz)


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Spectrum 101: Cellular and Wi-Fi

Cellular phone service and Wi-Fi both use a variety of bands to transmit signals

Bands defined by a specific range of frequencies (i.e. 700MHz band) Often further subdivided into blocks or channels

Spectrum can be licensed (exclusive to the licensee) or unlicensed (public) Example: AT&T holds the license to the 700MHz B block in the New York area

Wi-Fi uses unlicensed spectrum in the 2.4GHz ISM band and 5GHz U -NII bands

The Federal Communications Commission determines who gets to use which bandsof spectrum and for what purposes

The FCC regularly changes the conditions under which different users utilize different bandsof spectrum, with the goal of maximizing public good

i.e. FCC revoked Lightsquareds ability to use its spectrum, because it interfered with GPS

When the FCC devises rules on how spectrum may be used, it issues a Notice of ProposedRulemaking, requesting comments from all interested parties

No one owns spectrum The FCC has enormous discretion to modify and revoke licenses


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Spectrum 101: A Brief History of Satellite Spectrum

In the late 1990s, numerous Mobile Satellite Services (MSS) firms emerged toprovide satellite phone and data service

The FCC gave MSS carriers free spectrum to use for mobile satellite services

These companies invested billions of dollars to launch satellites into space, butrealized too late that terrestrial mobile service ( e.g. Verizon) superior to satellite

Virtually all MSS carriers went bankrupt in early 2000s

Satellite phones became a niche product used only by customers who were out of the rangeof cell phone coverage areas, like drillship crewmen, mountain climbers, etc.

Disappointed by the prospects for their satellite operations, MSS carriers beganlobbying the FCC to allow them to re-purpose their spectrum for terrestrial usage

In midtown Manhattan, where no one would use a satellite phone, MSS carriers asked theFCC to allow them to use their spectrum to provide cell phone or broadband coverage,utilizing land-based base stations (i.e. cell towers) instead of satellites

FCC faced a dilemma:The problem: Terrestrial cell companies like AT&T and Verizon paid for their spectrum viaauctions, whereas MSS carriers were given their spectrum for free

The solution: Allow MSS to re-purpose their spectrum on earth for terrestrial usage, butrequire them to maintain their satellite operations

MSS carriers were required to maintain spare satellites, provide coverage in all 50 states, etc.


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GSAT's Spectrum

GSAT is the exclusive licensee to the following spectrum for terrestrial usage:7.775 MHz of spectrum between 1610 MHz and 1617.775 MHz

This spectrum resides in the same band as LightSquareds spectrum, which as welldiscuss later renders this spectrum relatively worthless for terrestrial purposes

11.5 MHz of spectrum between 2483.5 MHz and 2495 MHzThis is the spectrum which forms the underpinning for GSATs valuation

20032008

The FCC created framework of conditions under which MSS carriers like

GSAT could re-purpose their satellite spectrum for terrestrial purposes

The FCC authorizes GSAT to lease its spectrum to its newly createdpartner, Open Range Communications

2010 Open Range was a complete failure and FCC revoked GSATs right to usesatellite spectrum for terrestrial usage, until it came up with a better idea


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GSATs Better Idea

20112012

2012

20132014

DISH buys two defunc t MSS com panies (Terrestar and DBSD)

out of bankruptcy

FCC grants DISHs request to convert the acquired spectrum toful ly terrest r ial use and w aives requirements to m aintain satel l i tebus iness

In Novemb er 2012, GSAT pet i t ions th e FCC to al low i t to u se i tsspectr um for cel lular usage, like DISH, and for a new offeringcal led Terrestr ial Low - Power Service (TLPS)

FCC disregards GSATs request to re -purpos e satel l i te spectr umfor ce l lu lar usage, bu t i s sues Not ice of Proposed Rulemaking

(NPRM) on TLPS, soliciting comments from interested parties

Com ment p eriod for NPRM closed in June 2014, and the publ iccurrently awaits the FCCs next actions on the topic


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GSATs Spectrum in Context (to Scale)

The GSAT spectrum story has quietly evolved over timeOriginally: turn red into blue (ie. Open Range, 2012 FCC petition)

Now: turn red into gray (TLPS is a paid Wi-Fi channel)

(Very different propositions, yet bulls use the same comps)

1. LTE bands supported by iPhone 6 Model A1586. Some bands may not be available in the US.

Frequencies that an iPhone 6 1 Can Use Today + GSAT

Licensed cellular bands (exclusive to AT&T, Verizon, Sprint, T-Mobile, etc.)

Unlicensed bands (available to any compliant device, esp. Wi-Fi)

GSATs frequencies for terrestrial operations in the US

700 MHz

1000 MHz 2000 MHz 3000 MHz 4000 MHz 5000 MHz 6000 MHz


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A Closer Look Into TLPS


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Why Does GSAT Say We Need TLPS?

Below are excerpts from GSATs FCC filings and website: The Commissions terrestrial low power rules would deliver substantial and immediatebenefits to consumers by almost immediately expanding the nations wireless broadbandcapacity and alleviating the w ors ening Wi-Fi traff ic jam in the 2.4 GHz band. AcceleratingInternet usage and resulting congest ion have diminished the quality of Wi-Fi service athigh- traffic hotspots, and Wi -Fi has become an unreliable way to access broadband inmany urban environments.

TLPS would deliver substantial public interest benefits by adding to the nations supply ofbroadband spectrum, helping to alleviate the worsening Wi-Fi traff ic jam , and expandingwireless broadband capacity for American consumers. The nation is out of Wi -Fi spectrum. The proliferation of Wi-Fi devices together with massconsumer adoption has resulted in a " Wi-Fi Traff ic Jam" with more data being transportedover Wi-Fi than any other medium. Most consumers encounter the "Jam" when attemptingto download mobile content in densely populated settings such as airport terminals,apartment buildings, school campuses, or a favorite coffee shop located on a busy streetcorner.

Globalstar makes it clear that the main thrust of TLPS is to alleviate congestion andtraffic jams in current Wi -Fi deployments

TLPS supposedly solves the Wi-Fi congestion epidemic


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What Benefits Does TLPS Not Offer?

Companies already provide private, national and fast networks without TLPS

Creating a private Wi -Fi network

Wi-Fi networks are generally already private! Authorized users only

Creating a national Wi -Fi network

Has nothing to do with licensed vs. unlicensed spectrum

US cable cos (e.g. Comcast) already building out huge hotspot footprints withexisting technology and spectrum

Large Wi-Fi networks already popular in Europe (Fon , The Cloud)

(Who would pay for all the equipment? Where would it go?)

Creating a lightning -fast Wi-Fi network

Maximum speed would be no better than existing 2.4GHz Wi-Fi (e.g. 802.11n)

Maximum speed would be substantially lower than next-gen Wi-Fi (802.11ac)

(802.11ac exclusive to 5GHz, would not work with TLPS)Faster service only relative to a highly congested network


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Is Wi-Fi Congestion Actually a Major Problem?

GSAT paints a dire picture of the Wi- Fi status quo

GSAT and its promoters: of course it is!

Below are images from GSATs website:


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How GSAT Bulls Envision Existing Wi-Fi Spectrum


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A More Accurate Mental Image

The I-10 Katy Freeway in Houston, July 2009. Source: Socrate76 via Wikipedia .
http://en.wikipedia.org/wiki/Interstate_10_in_Texashttp://en.wikipedia.org/wiki/Interstate_10_in_Texas


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More Examples of Successful Large-Scale Wi-Fi Deployments

Engineers have created great Wi-Fi in challenging environments

Sochi 2014 Winter Olympics2,500 Wi-Fi access points supporting 120,000 simultaneous mobile devices

Super Bowl XLVIIIFree Wi-Fi for 82,529 fans. At halftime, 13,500 were connected to Wi-Fi

3.2 terabytes of traffic (1 TB = 1,000 GB)

Mobile World Congress 2014 (Barcelona)Free Wi-Fi for >80,000 attendees

19.1 terabytes of traffic

5GHz vs. 2.4GHz usage: 58%/42%

Stanford University Computer Science dept. building2,700 unique clients per month

1.32 terabytes of monthly traffic

Supporting robot users as well as humans!


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We Sought Out Alternative Views

What do outside experts think about TLPS?

We spoke to many experts as part of our research, including:

Consultant on satellite and wireless business issues

Principal of wireless/mobile advisory firm

Wi-Fi network architect with extensive experience on national buildouts

Wi-Fi network architect specializing in stadium and other high-density deployments

Wi-Fi engineers at access point manufacturers

Consultant on telecom infrastructure, former director of tech strategy at major carrier

Vice president of technology research firm (specialized in wireless networking)

Attorney focused on telecom regulation

Public-policy expert at open-Internet advocacy group

Chief of product management at mobile technology start-up

Sales manager at Wi-Fi technology firm

President of FCC-approved TCB (Telecommunications Certification Body)

(and many more)


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Expert Views on TLPS, Part 1

If it [the TLPS proposal ] went through, no one would care.

head of wireless/mobile advisory firm

The people you are talking to are full of it. Unlicensed [spectrum ] isnowhere near exhaustionOn top of that, FCC is bending overbackwards to give us tons of additional spectrum.

senior technical leader at top mobile-networking firm

If performance is the issue, why arent we moving to 5 GHz? This issomebodys engineering solution looking for a business problem to solvethat doesnt understand how these things actually are regulated.

engineer and former voting member of Wi-Fi standards body


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[Q. Do you think theres a big [Wi -Fi] interference issue?...Does that sound likea real business problem to you?]

The answer to that, and how I advise clients, is no. Interference is the directresult of not understanding how to design the environment to achieve theoperational parameters which youre trying to have implemented. If you dont for example, if you dont design to the right signal -to- noise ratio, youre goingto have interference. If you doyou dont have a problem. Ive been designing

networks for 30 years, and when were doing mission -critical wireless designsthis isnt a problem. So when did this just start coming up? This ismarketingAt 5GHz Ive got 26 different channels, and were not seeing anyissues being able to move throughout those bands anywhere. And even if I didhave adjacent channel interference or capability issues, proper design of thesignal-to-noise ratios and the transmit power associated with the access pointis how we fix those problems. So there are a lot of tools that weve alwaysused to be able to solve these problems. If you dont use the tools, then yeah,you can create a bad network. Geez, I can create a bad Ethernet network too! Interesting thought process, but mostly marketing fluff.

engineer and former voting member of Wi-Fi standards body


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What is a Wi- Fi Channel?

A Wi-Fi channel is a band of spectrum frequencies, typically 20MHz wide, acrosswhich Wi- Fi signals are transmitted between access points (i.e. r outers) and user

devices (i.e. smartphones, laptops, etc.)

Internet signals come in throughwired cable / fiber provided by TimeWarner, Verizon FiOS, Comcast, etc.

Modem

Wi-Fi access pointstransmit signals to andreceive signals from userdevices

Wi-Fi signals are transmitted from Access Points toUser Devices across a channel , which is a~20Mhz band in the electromagnetic spectrum

User devices includesmartphones, tablets,laptops, etc.


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Graphic Representation of GSATs TLPS Concept

The 2.4GHz unlicensed band is used by Wi-Fi. In the U.S., users predominantlytransmit signals on channels 1, 6, and 11

TLPS would be a 4 th non-overlapping channel (called channel 14) between 2473MHzto 2495MHz, and would be exclusive to GSAT and its customers

Channel 1

2401

2.4Ghz 2.5GHz

Channel 6 Channel 11 TLPS

2423 2426 2448 2451 2473 2495

Below are the spectrum frequencies used for cellular and Wi-Fi, with a focus on the 2.4GHz band

Unlicens ed

700 MHz

1000 MHz 2000 MHz 3000 MHz 4000 MHz 5000 MHz 6000 MHz


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How Many Wi-Fi Channels Are There?

Free channels in US today: 3 in 2.4 GHz, 22 in 5 GHz

16

11ISM band

2.4 GHz

157161

165

153

149

144

140

136

132

116

104

108112

100

64

60

56

52

48

4440

36

U-NII-1 band

U-NII-2A band

U-NII-2C band

U-NII-3 band

5 GHz


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What Would TLPS Contribute?

TLPS = one additional channel when there are 25 other ones available!

16

11ISM band

Public Wi-Fi

157

161

165

153

149

144

140

136132

116

104

108

112

100

64

60

5652

48

44

40

36

U-NII-1 band

U-NII-2A band

U-NII-2C band

U-NII-3 band

14

TLPS


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What Exactly is Wi-Fi Congestion?

Wi-Fi congestion is more commonly called "Co- channel interference

Co-channel interference results when there are too many signals on a single channelThe issue: too many devices trying to share a single channel in a single location

Too many users on one access point or too many access points sharing a channel

Wi-Fi signals follow a politeness protocol APs / user devices scan channels to seeif there are other signals on channel before transmitting

Wi-Fis Politeness Protocol = LISTEN BEFORE YOU TALK!!!

Many signals on channel APs / user devices keep waiting and waiting slow speeds

If multiple access pointsare all using the samechannel, and many userdevices (i.e. 20+) areutilizing substantialbandwidth at the sametime on that channel, co-channel interference cancause slow Wi-Fi


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Explaining Co-Channel Interference

My network (Channel 1)

10010010


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Your network (Channel 1)

001001101


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Your network (Channel 1)My network (Channel 1)

10010010


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Your network (Channel 11)

001001101


10010010


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How Do You Solve Co-Channel Interference?

Unlike cellular signals, Wi-Fi signals travel short distances:

Wi-Fi signals typically travel ~100 feet, whereas cellularsignals travel 1+ mileIf access points are 300 feet from each other, they wontnecessarily detect each other

A channel can comfortably handle ~30 user devices

DeployMultipleAccessPoints

ChannelRe-Use

AccessPoints Use

DifferentChannels

There are 25 different channels that can be used

3 in 2.4GHz, 22 in 5GHz

Because Wi-Fi signals travel short distances, access pointscan be placed far enough away from one another such thatchannels can be re-used

Power of access points can be turned down and artificial /natural barriers utilized to further prevent channel overlap

+

+


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Channel Reuse, in Picture Form

Below is a 1-6-11 channel reuse pattern

http://blogs.aerohive.com/blog/the-wireless-lan-training-blog/wifi-back-to-basics-24-ghz-channel-planning

As Wi- Fi has become more popular, its become obvious that deployments wouldbenefit from having more than 3 channels to reuse. The solution? 5 GHz!


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Illustrative Example: Access Points in an Auditorium

Below is an illustrative example of access points in an auditorium

Each circle refers to an access points range, and the numbers in the circle refer tothe 2.4GHz and 5GHz channels on each access point

A typical access point can easily handle 20-100 user devices


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Examples of Channel Re-Use Wi-Fi deployment

By deploying numerous access points that each have limited ranges, and havingaccess points utilizing different channels, and benefitting from the fact that each

access point can typically handle 30+ user devices, Wi -Fi congestion is a problemthats solved routinely by network administrators all over the world

Because access points can have limited ranges, power levels can be reduced, andbarriers can be utilized to block signals, channels can be re-used many times in thesame environment

Examples

We spoke with the network administrator of a major university, and in their mainlibrary, the university deploys 26 access points which utilize ~12 channels in both2.4Ghz and 5GHz, and provide Wi-Fi services to peak usages of 2,000 students

At Interop Las Vegas, 68 APs provided service to a maximum of 1,496 concurrentusers ( http://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.html )

Fashion Institute of Technology: network of 1,000 802.11ac APs serving 10,000students along with faculty, staff, and a museum with 100,000 annual visitorsSheraton Gateway LAX: 802 guest rooms (500,000+ square feet), covered with 48

APs
http://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.htmlhttp://www.theruckusroom.net/2014/06/a-wi-fi-gamble-at-interop.html


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5GHz Provides 22 Channels! And that Will Increase in the Future!

Regulators are pushing to make 5GHz Wi-Fi spectrum even more abundant

Source: Andrew von Nagy, Going Beyond RF Coverage: Designing for Capacity , from wirelessLAN Professionals Summit 2014

5 GHz provides more than enough channels for IT professionals to deploy Wi-Fi ineven the most high-density, high-use environments

Many high-density environments only use 8- 12 channels, because they dont evenneed the remainder

The FCC is studying the addition of another ~12 channels in the future
https://dl.dropboxusercontent.com/u/8644251/Design%20Your%20WLAN%20for%20Capacity%20Presentation%20at%20WLPC%202014.pdfhttps://dl.dropboxusercontent.com/u/8644251/Design%20Your%20WLAN%20for%20Capacity%20Presentation%20at%20WLPC%202014.pdf


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Statistics on 5GHz Usage Today and In the Future

5GHz is widely used today, and its use will increase in the future

Examples

At the Mobile World Congress, 58% of devices at the 2014 Mobile World Congressused 5GHz (mobileworldcapital.com/en/article/457)

At the Cisco Live 2014 conference, 60% of wireless devices used 5GHz and 80% ofwireless traffic was transmitted over 5GHz (bit.ly/1vVotoO)

At a major sporting and concert venue in Vegas, 5GHz usage was 40% in 2013, 50%at beginning of 2014 and ~80% today

Commentary

We heavily rely on band select to place as many devices as possible on 5Ghz wheremore channels are available. Joe Rogers, Associate Director of NetworkEngineering at University of South Florida (bit.ly/joerogers)

5GHz is widely used today, and will only be more widely used in the future


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5GHz in Practice, in the Words of a Practitioner

Below is an excerpt from DigitalAir Wireless Networks, an IT consultancy based inthe UK, in their A Quick Guide to 5GHz in the UK

Wi-Fi Practitioners are flawlessly deploying Wi-Fi in many high-density settings

To demonstrate why 5GHz is pretty awesome; imagine 500 people in a single room together all usingwireless devices. Now lets take an enterprise level access point capable of sensibly handling 50 clientson its 2.4GHz radio. With 3 of these in a single room (channels 1, 6 and 11) you have no channeloverlap and the capacity for 150 clients. But what about the other 350 you ask? Well no problem, letschange these 3 access points for dual radio 2.4/5GHz access points. Now each 5GHz radio can takeon 50 clients too... that results in 300 clients now being looked after by the network. But wait, there arestill 200 clients not being looked after... The problem is we have used the 3 non-overlapping 2.4GHzchannels so can't really use them again as it is a single room with no walls to attenuate the signal.Have no fear though! This is where the larger number of usable 5GHz channels comes in handy. Byadding another 4 access points which only have their 5GHz radios switched on you can now handle all500 clients and haven't reused any channels anywhere in the room (3 access point radios on 2.4GHzand 7 radios on 5GHz). Hurrah!

Now the above is just a simple example, and assumes that all the devices being used are dual banddevices that support both 2.4GHz and 5GHz. Also, in reality with some clever design incorporating amixture of cleverly placed directional access points, the right power levels and various other tricks ofthe trade you may be able to re-use some of your 2.4GHz channels without it being too detrimental buthopefully you get the idea.

Source: http://www.digitalairwireless.com/wireless-blog/t-eirp/quick-guide-to-5ghz-uk-part-2.html


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5GHz Wi-Fi Makes Channel Planning Even Easier

Metageek (major producer of Wi-Fi network-analysis tools for IT professionals)

The 5 GHz bandis relatively empty

5 GHz: no danger ofsharing a channel


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Illustrative Example: Access Points on a Busy City Block

Below is an illustrative example of an unmanaged network

Each circle refers to an access points range, and the numbers in the circle refer tothe 2.4GHz and 5GHz channels on each access point


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Wi-Fi Shortcomings: A Real-Life Case Study

This is a Wi- Fi congestion nightmare

Small Wi-Fi network in Midtown Manhattan

One access point, ~20 users

Ran Metageek software to analyze performanceLots of problems!

Screenshot from Metageek inSSIDer Office

Using a sub-optimal channel

Sharing channel with many other networks

with high signal strength

Lots of networks in neighboring channels


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Bad Wi-Fi Has Many Possible Causes

On average Wi-Fi performs well, but (of course) performance varies

Many reasons for bad performance that TLPS cant address, e.g.: Legacy devices on the network (esp. 802.11b)

Low-quality AP or controller hardware

Slow backhaul (e.g. old DSL connection)

Too many users per access point

Badly chosen access-point locations (e.g. placed near barriers)

Huge improvements possible with no new spectrum: Starbucks switching to Google/Level 3 for in-store Wi-Fi

Expected speed improvement: 10x

Aruba Networks field test in Hong Kong university environmentBand steering toward 5GHz doubled average throughput

60% of devices achieved speeds >10 Mbps, up from 20% w/o band steering

Bad Wi- Fi typically does not have anything to do with congestion


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What Would TLPS Actually Look Like? Part 1

In a managed network, would it be one licensable channel being constantly re-used?

This is a Wi- Fi congestion nightmare, everyones using the same channel!


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In a managed network, would it be one licensable channel when the others are free?

Why would you use Channel 14, when there are 25 free channels?

TLPS?!

h ld ll k k


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In an unmanaged environment, would everyone have TLPS?

This is a Wi- Fi congestion nightmare, everyones using the same channel!

Wh W ld TLPS A ll L k Lik ? P 4


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In an unmanaged environment, who would pay for a Wi-Fi channel that can begotten for free?

TLPS?!

- Cant use 802.11ac or 5GHz - Cant use 40MHz+ channel sizes - Cant have multiple access points - Must pay Globalstar a fee

And whats the benefit? Justadd an AP with a new 5GHzchannel if co-channel interferenceis that much of a problem!


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N G i Wi Fi 802 11AC E l i h 5GH B d


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Next-Generation Wi-Fi at 802.11AC Exclusive to the 5GHz Band

TLPS can never be as good as 802.11ac can

Wi-Fi is governed by the IEEE 802.11 protocol, which is a set of network accessspecifications that provides the rules by which Wi-Fi wireless user devices and wired

networking infrastructures communicate with one anotherEvery few years, the IEEE LAN/MAN Standards Committee release a newgeneration of 802.11

802.11ac uses ONLY 5 GHz, and does not even operate on 2.4 GHz!!

802.11ac provides faster speeds, better spectral efficiency, boosts throughput

Over the next few years, the vast majority of Wi-Fi traffic will utilize 802.11ac

2003802.11a/802.11b 802.11g 802.11n Next generation protocol,802.11ac, released in Dec-13

1999 2009 20132003

N t G ti Wi Fi I St ti t A


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Next-Generation Wi-Fi Is Starting to Appear

Stuck on 2.4GHz, TLPS users will never enjoy these lightning-fast speeds

Source: Apple

A P i t M f t A U i I d U f 5GH
https://www.apple.com/macbook-air/features.htmlhttps://www.apple.com/macbook-air/features.html


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Access Point Manufacturers Are Urging Increased Use of 5GHz

Access point manufacturers are guiding enterprise users to maximize usage of 5GHz and minimize usage of 2.4 GHz:

Dont Use 2.4 GHz!!

The multimedia -grade residence hall must use the 5 GHz band as the primary service band forstudents. Using the 5 GHz band as the primary band may be a mindset change for somenetwork administrators. However, we must stop thinking of offloading the 2.4 band (whichimplies that 2.4 GHz is primary). Instead, we must think of the 2.4 GHz band as the legacy orsafety-net band to provide service to those devices that are not capable of using the extracapacity and speeds of 5 GHz.

The 2.4 GHz band has only three to four low-capacity channels available, and it will never scaleto deliver high-capacity services. However, the 2.4 GHz band plays a vital role, which is tobridge the gap and allow legacy and low -speed devices to communicate within the microcellinfrastructure Smartphones are easily capable of overwhelming 2.4 GHz channels, so it is agood idea to partition their traffic on a separate band.

- Aruba Networks White Paper on Next Generation Wireless Architecture for Multimedia-GradeResidence Halls

5GH Wi Fi H B H f Y


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5GHz Wi-Fi Has Been Here for Years

2.4GHz-only chips are rapidly going extinct

Source: ABI Research, Kerrisdale analysis. Note: 802.11g/b/a category assumed to be 2.4GHz only. 802.11ad -only WiGig devices excluded.

802 11ac Is Here Today and Will Dominate in the Future


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802.11ac Is Here Today and Will Dominate in the Future

Key 802.11ac features require 5GHzs abundant bandwidth, low interference

In 2018 TLPS will still be using an obsolete, decade-old technology

Source: ABI Research, Kerrisdale analysis. Note: 802.11ad-only WiGig devices excluded.

Band Steering Shows that Experts Prefer 5GHz Today


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Band Steering Shows that Experts Prefer 5GHz Today

Enterprise-grade hotspots push users toward 5GHz

Cisco Meraki : the MR18 uses band steering to automatically serve 5 GHz -capableclients with the 5 GHz radio, maximizing capacity in the 2.4 GHz range for older

802.11b/g and 2.4 GHz- only clients Aruba Networks : Adaptive Radio Management (ARM) No more RF interference

ARMs band steering feature encourages dual -band capable clients to stay on the 5GHzband on dual-band APs, freeing up resources on the 2.4GHz band for single- band clients

Band steering reduces co -channel interference and increases available bandwidth for dual-band clients, because there are more channels on the 5GHz band than on the 2.4GHz

band Ruckus Wireless : 5 Ghz The Key to Client Density

[T]he 5 GHz band has much more capacity. Depending on a specific nations regulationsthere may be as many as 23 non- overlapping channels available in the 5 GHz spectrum!

Ruckus APs now support Band Steering to help with exactly this type of deployment

Aerohive Networks : Moving user traffic to the 5 GHz radio bandis a long -standingtechnique to increase total throughput


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Expert Views on TLPS Part 4


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Page 62


We design for 5-gig exclusively. The 2.4 is an afterthought. No one

writes for 2.4 anymore because its stupid. The only reason, only only onlyreason, for 2.4 is if you have a device thats so old it cant use 5-gig.

If you call me four years from now and say, Ive got this cool idea about2.4 , Id say, What are we doing in 2.4? We stopped using that yearsago!

I would strongly recommend that Globalstar just give it up and put [thespectrum ] back in the public domain but then their investors wouldnt getany cash. But I dont think theyre going to get any cash anyway!

high-profile Wi-Fi expert with more than a decade of experience

TLPS = Slower Wi Fi Part 1


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TLPS = Slower Wi-Fi, Part 1

TLPS would pale in comparison to state-of-the-art Wi-Fi

Common market perception: TLPS would be faster than normal Wi-Fi

But remember: no new technology

TLPS cannot possibly outperform other 2.4GHz channels unless they aresuffering from major interference

TLPS would almost certainly be slower than 5GHz Wi-Fi

Even with 802.11n

Especially with 802.11ac

Inherent throughput disadvantages of TLPS:Narrow bandwidth

Less efficient modulations (no 256-QAM)

More adjacent-channel interference (e.g. with Channel 11)

Harder to create small cells

TLPS = Slower Wi Fi Part 2


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Page 64


On a laptop, 5GHz would outperform TLPS at any reasonable distance

Source: Miercom Report 130916 , Oct 2013, Figure 11

TLPS = Slower Wi-Fi Part 3
http://miercom.com/pdf/reports/20130926.pdfhttp://miercom.com/pdf/reports/20130926.pdf


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On a phone, 5GHz would outperform TLPS at any reasonable distance

Source: Miercom Report 130916 , Oct 2013, Figure 13
http://miercom.com/pdf/reports/20130926.pdfhttp://miercom.com/pdf/reports/20130926.pdf


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If Wi-Fi Is Terrible Why Is It So Popular? Part 1


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If Wi-Fi Is Terrible, Why Is It So Popular? Part 1

Consumers prefer Wi-Fi along almost every dimension

Cisco consumer survey:



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If Wi Fi Is Terrible, Why Is It So Popular? Part 2

Businesses prefer Wi-Fi along almost every dimension

Cisco business survey:



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Tablet buyers not bothering with cellular data because Wi-Fi works

Vast majority of tablet buyers dont want cellular data plans, happy with Wi -Fi alone:



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Wi-Fi quality is getting better, not worse

Wi-Fi analytics firm wefi, Q1 2014 report:Consumers see Wi- Fi as a superior experience vs. cellular

Average W i-Fi sp eeds are 27% faster year-over-year

How Much Speed Do You Need?


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How Much Speed Do You Need?

Average Wi-Fi performance more than adequate for wide range of uses

Throughput requirements from Aerohives white paper High-Density Wi-Fi Design Principles . Red error bars indicate ranges.

How Much Speed Do You Get? Part 1
http://www.aerohive.com/pdfs/Aerohive-Whitepaper-Hi-Density%20Principles.pdfhttp://www.aerohive.com/pdfs/Aerohive-Whitepaper-Hi-Density%20Principles.pdfhttp://www.aerohive.com/pdfs/Aerohive-Whitepaper-Hi-Density%20Principles.pdfhttp://www.aerohive.com/pdfs/Aerohive-Whitepaper-Hi-Density%20Principles.pdfhttp://www.aerohive.com/pdfs/Aerohive-Whitepaper-Hi-Density%20Principles.pdfhttp://www.aerohive.com/pdfs/Aerohive-Whitepaper-Hi-Density%20Principles.pdf


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Public Wi-Fi: good enough for most uses, sometimes excellent

Hotspot performance data from June 2013 Allion report .

public Wi-Fiaverage Wi-Fi

http://allionusa.com/wp-content/uploads/2014/02/AllionUSA_Public_Hotspot_Competitive_Analysis.pdfhttp://allionusa.com/wp-content/uploads/2014/02/AllionUSA_Public_Hotspot_Competitive_Analysis.pdf


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Home Wi-Fi: fantastic

ISP wireless gateway performance data from April 2013 Allion report .

home Wi-Fiaverage Wi-Fi

http://allionusa.com/wp-content/uploads/2014/02/allion-usa-whitepaper-internet-service-provider-wireless-gateway-competitive-analysis.pdfhttp://allionusa.com/wp-content/uploads/2014/02/allion-usa-whitepaper-internet-service-provider-wireless-gateway-competitive-analysis.pdf


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p ?

Unlicensed, disorganized Wi-Fi outperforms licensed, managed cellular

A more rigorous assessment: Sommers & Barford , Cell vs. WiFi: On thePerformance of Metro Area Mobile Connections (2012)

Draws on crowd-sourced data from Speedtest.netLooks at 15 different metro areas over 15-week period

Over 3 million observations

Compares unlicensed Wi-Fi vs. licensed cellular performance

Conclusions:

In other words, where its available, Wi-Fi beats cellular

Our basic performance comparisons show that (i) WiFi provides betterabsolute download/upload throughput, and a higher degree ofconsistency in performance ; (ii) WiFi networks generally deliver lowerabsolute latency, but the consistency in latency is often better with cellularaccess; (iii) throughput and latency vary widely depending on theparticular access type (e.g. HSPA, EVDO, LTE, WiFi, etc.) and service

provider.



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p

Detailed US data from Sommers & Barford, Table 3:

LocationMedian cellthroughput

(Mbps)

Median Wi-Fithroughput

(Mbps)Which is better,cell or Wi-Fi?

New York, NY 1.7 7.0 Wi-Fi

Los Angeles, CA 1.3 5.6 Wi-Fi

Chicago, IL 2.3 7.8 Wi-Fi

Columbia, SC 1.3 4.3 Wi-Fi

Syracuse, NY 1.1 7.9 Wi-Fi

Madison, WI 0.9 5.7 Wi-Fi

Jackson, TN 0.8 3.2 Wi-Fi

Lawrence, KS 1.2 4.6 Wi-FiMissoula, MT 0.7 3.6 Wi-Fi

Wi-Fi performance beats cell performance across the country

The Success of Large-Scale Wi-Fi Deployments, Part 1


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g p y ,

even for the most discriminating audiences

Apple Worldwide Developers Conference 20141,000 Apple engineers and 5,000 third-party developers

The results:

The Success of Large-Scale Wi-Fi Deployments, Part 2


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g p y ,

even for the most discriminating audiences

San Francisco: 3 miles of free public Wi-Fi along Market Street250,000 daily visitors

The results:

7782 = Ruckus ZoneFlex7782 outdoor access point

Even Chick-fil-A Has Good Wi-Fi!


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Page 78

Wi-Fi Practitioners Plan Their Way Around Potential Congestion


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y g

Cisco, Wireless LAN Design Guide for High Density Client Environments in HigherEducation

In any Wi -Fi design, the effects of CCI [co-channel interference] can be limited by isolatingthe individual cells from one another through the use of non-overlapping channels andnatural environment attenuation (walls, ceilings, file cabinets and cubes).

In a normal design, the environment and distances we are covering generally permitadequate coverage without a lot of CCI.

Certified Wireless Network Administration official study guide

When overlapping coverage areas with colocated devices, make sure the output power isnot higher than is needed

802.11 Wireless Networks: The Definitive Guide (Matthew Gast , OReilly) If there is contention for radio resources, changes should work to reduce that contention.One of the best ways to increase performance is to reduce the power on access points.

Aerohive Design & Configuration Guide: High-Density Wi-Fi (Andrew von Nagy)

You can increase spectral capacity within a physical coverage area by deploying adjacentor colocated APs that operate on nonoverlapping channels

and by applying a channel reuse plan that minimizes co -channel interference

IT experts solve co-channel interference every day using existing spectrum

Wi-Fi Congestion: A Brief Recap of What Weve Learned


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g p

Stripped of the hype, its clear that TLPS has little value

Current Wi-Fi performance using unlicensed spectrum is quite good

With proper planning and infrastructure Wi-Fi works well even with

huge numbers of concurrent usershuge data loads

Wi-Fi failures often have nothing to do with inadequate spectrum

Co-channel contention routinely addressed with simple fixes

Wide-open 5GHz band promises even greater performance improvementsNot a far-off future technology but something widely used today

The odd man out: GSATs TLPS concept TLPS provides a paid Wi-Fi channel, when the alternatives are free

Based on 2.4GHz band (5GHz increasingly relevant)

Only adds value where co-channel contention is a major problem (rare)

$4B solution to a challenge that engineers overcome daily without fanfare

GSATs Spectrum vs. Unlicensed Wi -Fi Spectrum (to Scale)


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U-NII-3extension (justenacted)

GSAT2.4GHz band

2.4GHzISM band

5GHzU-NIIbandstoday

ProposedU-NII-2B

andU-NII-4bands

83.5 MHz

555 MHz

25 MHz

195 MHz

We compare the amount of GSATsavailable spectrum with the amount ofavailable unlicensed Wi-Fi spectrumGSATs spectrum in the 2.4GHz bandis a tiny fraction of the total unlicensedWi-Fi spectrum, which includes:

83.5 MHz in the 2.4GHz ISM band,available today

555 MHz in the 5GHz U-NII bands,available today

25 MHz recently added to the U-NII-3band

195 MHz in the proposed U-NII-2B andU-NII-4 bands, which the FCC is

working to free up

Cisco: TLPS Nothing More Than Paid Wi -Fi Offering


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TLPS is simply one licensable Wi-Fi channel

Behind Globalstars new moniker, TLPS will be nothing more than apaid Wi-Fi offering using the legacy IEEE 802.11b/g/n amendments anoffering that is only possible because of the happenstance thatGlobalstars MSS spectrum is adjacent to the unlicensed commons.

While Globalstar has claimed TLPS will offer higher data rates thantraditional Wi-Fi at 2.4 GHz, the Commission should note that Globalstaris not proposing here any technological advancement . To thecontrary, Globalstars plan is built around use of the legacy IEEE802.11b/g/n amendments. To the extent that Globalstars TLPS may offerhigher speeds, it will simply be because fewer users will be willing topay Globalstar for the privilege of using its spectrum and thus fewerusers will be sharing Channel 14 compared to other 2.4 GHz Wi-Fichannels.

Cisco Systems, Inc., May 5, 2014, submission to FCC

TLPS is Just a Gimmick for GSAT to Totally Not Go Bankrupt


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TLPS is simply one licensable Wi-Fi channel

Globalstar proposes to combine the features of the amazingly successful

Wi-Fi Band with the amazingly unsuccessful business model of Clearwireto totally not go bankrupt this time. Globalstar will offer a terrestrial low -power service (TLPS) which it will offer to lease out to people orotherwise make money by giving people WiFi they could get for free, butmake them pay for it. According to Globalstar, TLPS will be infinitelysuperior to cruddy old WiFi because it is licensed and therefore carriergrade and therefore people will totally pay gajillions for this even thoughthe thing they like about WiFi is that its free and they dont have to dealwith a wireless carrier.

Harold Feld, senior vice president of Public Knowledge, a public-interest nonprofit focusing on telecom and internet policy (December 30,2013)


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Spectrum Valuation

In Response to 2012 Petition, FCC Only Considered TLPS


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Page 85

In November 2012, GSAT petitioned the FCC to authorize its spectrum for (1)cellular usage, like DISH, and (2) for TLPS, a Wi-Fi like service

The FCC disregarded GSATs request to re -purpose its satellite spectrum for cellularusage

Current rulemaking is considering converting GSATs spectrum to Wi -Fi spectrum,NOT cellular spectrum

Cellular and Wi-Fi spectrum are highly different from one another, in numerousways, and should be valued very differently

Wi-Fi and Cellular Bands Should be Valued Very Differently


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The FCC imposes different power restrictions on different bands of spectrum, andthis is a subject of intense debate in FCC rulemakings

The FCC is concerned about licensees of bands interfering with co-licensees of the sameband, or with neighboring bands

Example: AT&T and Sirius fought for more than a decade on power and usage restrictionsin AT&Ts licensed spectrum in 2.3GHz. Ultimately, AT&T agreed not to use the 10 MHz ofits 20Mhz of its spectrum that neighbors Siriuss spectrum, to appease Sirius and FCC

TLPS = Terrestrial Low-Power Service

Wi-Fi / TLPS signals must be transmitted at much lower power than cellular signalsWi-Fi, and TLPS, power emissions are capped at 4 watts (36 dBm) whereas celltowers can typically transmit up to 1,640 watts (62 dBm)

Vs.

Low-Power Wi-Fi Access Points

Higher-Power CellularBase Station

Low Power Means Much Higher Deployment Costs


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Low power signals have short range more base stations needed per unit area higher deployment costs

Conventional cell towers can transmit at 400x TLPSs maximum allowable power level National coverage using ~2.4GHz cellular spectrum: tens of thousands of base stations

National coverage using Wi-Fi / TLPS: hundreds of millions of access pointsToo expensive, so one provider will ever offer ubiquitous service

The power limits imposed upon GSATs spectrum in 2.4 GHz render it worthless

Neither cellular providers like Verizon or AT&T nor spectrum aggregators like DISHNetworks would be interested in spectrum with such onerous power restrictions

Likewise, if tech companies like Google, Microsoft or Amazon wanted to purchasespectrum for a new innovative use, they would purchase spectrum that does not haveonerous power restrictions

TLPS Spectrum Cellular Spectrum# of Sites for National Buildout 1,394,017,181 APs 110,941 base stations

Cost for National Buildout $3,485bn $28bnSource: Kerrisdale estimates, background provided in full Kerrisdale report

Why Did FCC Snub GSAT's Request to Use Spectrum for LTE?


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The FCC never specified precisely why it did not entertain GSATs request to utilizeits spectrum for cellular purposes

We believe that the FCC anticipates tremendous difficulties and complications in re-purposing GSATs spectrum for cellular usage:

RationaleReason 1 High power in GSATs 2.4GHz band could cause interference to Wi-Fi

Reason 2 GSAT must share its spectrum with numerous licensees on TVBroadcast Auxiliary Services (BAS) Channel A10

Reason 3 1.6GHz band is way too close to GPS

We dont think GSATs 2.4GHz band will ever be authorized for cellular usage

Globalstar Has the Wrong Neighbors


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Like LightSquared, GSAT is much less important than its spectral neighbors

GSATs 2.4GHz band neighbors unlicensed band used for Wi-Fi, Bluetooth, ZigBee,microwave ovens and many other devices

Given the importance of Wi-Fi and other unlicensed users in 2.4GHz, the FCC wouldlikely be highly concerned that potential GSAT cellular signals would causeinterference to lower-power signals of unlicensed users, including Wi-Fi, at 2483 andbelow

FCC has been willing to entertain GSATs TLPS proposal because, given its lowpower levels, it likely poses only a modest threat to existing Wi-Fi

X

The FCCs View on Interference Issues


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Unlicensed bands = Very important, GSAT Cellular = Not important at all

Below is a nuanced discussion of the FCCs general views on interference issues byspectrum users from telecom expert Howard Feld:

FCCs engineers on spectrum issues are extremely conservative. Indeed,I have often argued they are too conservative. This is not because theyare in the pay of the incumbents, but because they recognize that making

predictions about possible interference is not nearly the precise sciencethat people like to think it is. So the FCCs engineers tend to err well onthe side of caution when setting interference limits. From an engineering

standpoint, it is easier to loosen interference restrictions later if you weretoo conservative than try to mitigate interference if you were toooptimistic The FCC generally tries to balance competing interests,taking into consideration things such as how important (economically and

politically) is the existing service and how useful (from the FCCs perspective) would the new service be.

Harold Feld, senior vice president of Public Knowledge,a public-interest nonprofit focusing on telecom and internet policy(December 30, 2013)


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What is Globalstars 1.6GHz Band Worth?


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GSATs spectrum at 1.6GHz is likely worthless

Analysts and longs that we have spoken with agree that the 1.6 GHz band is unlikelyto be worth anything

LightSquared precedent renders GSATs 1.6GHz spectrum unusable As with the bankrupt LightSquared , GSATs uplink band is very close to GPS frequencies

Serious interference concerns preclude non-satellite use cases (as even bulls concede)

Thus any value that exists resides in GSATs 11.5 MHz of 2.4GHz downlink spectrum

Lightsquared has offeredto relinquish its spectrumat 1545.2-1555.2 forterrestrial use given theproblematic GPSinterference

US regulatory agency NTIAreleased letter on July 1 discussinghow govt engineers at Departmentof Transportation expressednumerous concerns over

Lightsquared using this spectrumfor terrestrial cellular

Like 1545- 1555, GSATs16MHz in 1.6 GHzneighbors GPS. EvenLightsquareds L-Band at1626-1660, which is even

further from the GPS bands,continues to raise numerousinterference concerns


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Interference Issues with GSAT's Co-Licensee BAS A10, Part 2


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Licensees exist in key metro areas, including New York, Chicago, Miami, Phoenix,Los Angeles, San Francisco, DC, Philadelphia, and Detroit

Map below shows the many large areas where Ch A10 licensees are legally entitledto interference protection:

Why a "Globalstar LTE" Band Would Never Be Acquired


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Additional features of the Globalstar LTE band would make GSATs spectrumunappealing to cellular acquirers

RationaleReason 1 Onerous power restrictions deployment costs too high

Reason 2 Acquirer would likely have to finance the re-location of BAS Channel A10 users to another frequency

Reason 3 Unusable 1.6GHz renders the 2.4GHz spectrum unpaired

Reason 4 GSATs extremely close proximity to Wi -Fi will likely cause self - jamming in resulting smartphones, as well as interference from Wi-Fi

Reason 5 Acquirer would inherit and have to maintain money-losing satellitebusiness

Reason 6 High frequency 2.4GHz spectrum far less valuable than lowerfrequency spectrum

Reason 7 With neighbors on either side, GSAT LTE would remain a thin 10MHzband forever

Way too many headaches for 10MHz of unpaired high frequency spectrum

LTE Technical Problems: Self-Jamming


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Smartphones are already jam-packed with manydifferent radio systems

Very easy for Wi-Fitransceiver to interfere withGSAT LTE due to closeproximity of frequencies

Very easy for LTE radio

using Sprint 2.5GHzspectrum to interfere withGSAT LTE due to closeproximity of frequencies

Need to convince devicemakers and standardsbodies to validate any newLTE band

Many practical hurdles to using a narrow, oddball LTE band in real devices

Wi-Fi/BluetoothantennaGPS antenna

multi-band cellularantenna

?!?

Adapted from CST AG, Analyzing RF Coexistence in a Mobile Handset
https://www.cst.com/Content/Articles/article923/CST-Application-Note_Analyzing-RF-coexistence-mobile-handset.pdfhttps://www.cst.com/Content/Articles/article923/CST-Application-Note_Analyzing-RF-coexistence-mobile-handset.pdf


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GSAT vs. Other Sources of New Spectrum Supply (to Scale)


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U-NII-3extension(just enacted)

Proposed3.5GHzextension

ProposedU-NII-2B

and U-NII-

4 bands

AWS-3auction

(Nov 14)

600MHzincentive

auction(2015)

Proposed

3.5GHzsmall-cellband

GSAT2.4GHz band

DISHspectrum(currentlyunused)

25 MHz

65 MHz

~120 MHz

56 MHz

195 MHz

100 MHz

50 MHz

Additional, not shown: Undeployed or little-

used carrierspectrum (e.g.Sprints 2.5GHzband)

TV white spaces Little-used bands

reserved for thefederal govt

Etc.

We compare the amountof GSATs availablespectrum with theamount of new spectrumsupply

For any prospectivebuyer, there is asubstantial amount of

spectrum that is or willbe available to buy orutilize

For Argument's Sake


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Weve discussed how the FCC has rejected Globalstars proposal to authorize itsspectrum for cellular usage, and weve discussed why its spectrum is unlikely to everbe considered for cellular usage

But hypothetically, if it was, what would it be worth?

Even if Globalstars spectrum was authorized for cellular usage, GSAT is still massively overvalued

As we will demonstrate in the following slides, even if GSATs spectrum wereauthorized for cellular usage, which we strongly believe it never will be, the stock

would still be ~5x overvalued!

Even with cellular approval, GSAT would have 80% downside

How Much Does Spectrum Cost, Anyway?


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GSAT bulls apply precedent pricing arbitrarily

How do you compare the price of, say, the 700MHz A Block license coveringHonolulu to the AWS-1 B Block license covering Bangor, Maine?

A common pricing metric: dollars per MHz-popNormalizes for 1) bandwidth (in MHz) and 2) covered population (for regional licenses)

A recent example: At an FCC auction in February, DISH bought all 176 regional licenses to the AWS H Block(1915-1920/1995-2000 MHz) for $1.564B

Bandwidth = 10 MHz (5 MHz uplink, 5 MHz downlink)

Population = 312,846,492 (US population per FCC, based on 2010 decennial census)

Dollars per MHz-pop = $1.564B / (10 MHz x 312.8mm people) = $0.50

But what is the right $/MHz -pop value to apply to GSAT?Bulls cite an array of precedents covering a wide range of values from ~$0.20 to ~$2

Often take some average (say, $1+)

Example: One sell-side target price assumes $1/MHz-pop but considers values as low as$0.25

What is GSAT's Market-Implied Spectrum Value?


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After subtracting an estimated value for the satellite business, we can determine thevaluation ascribed to GSATs spectrum

In the below calculation, we assume that 10 MHz of GSATs spectrum in 2.4GHz isuseable

GSATs spectrum value of $1.19 is ludicrously high given multitude of issues

Backing Out GSATs Market-Implied Spectrum Value($mm )

A Total EV 4,114B Less: EV attributable to MSS business (based on comparables) 325

C = AB Implied EV attributable to terrestrial use of spectrum 3,789% of total EV 92%

D Usable terrestrially licensed spectrum (MHz) 10E US population (mm) 318

F = D x E MHZ-pops 3,184

C / F Implied spectrum value per MHz-pop $1.19

Historical Precedent Spectrum Transactions


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Below are various historical spectrum transactions

Source: Please see full report for footnotes and additional details

Spectrum Frequency (MHz) Price

Description Period type Approx. midpoint ($/MHz-pop) AWS auction Apr 2006 AWS 1933 $0.54Clearwire/BellSouth Feb 2007 EBS/BRS 2654 $0.18

AT&T/Aloha Oct 2007 700MHz 722 $1.06700 MHz auction Mar 2008 700MHz 744 $1.28Sprint/Clearwire May 2008 EBS/BRS 2654 $0.26Harbinger/SkyTerra Sep 2009 MSS 1593 $0.25

AT&T/Qualcomm Dec 2010 700MHz 722 $0.85

Dish/DBSD2 Mar 2011 MSS 2100 $0.15Dish/TerreStar Jul 2011 MSS 2100 $0.13Verizon/Cox Dec 2011 AWS 1933 $0.56Verizon/SpectrumCo Dec 2011 AWS 1933 $0.68Verizon/Savary Island Dec 2011 AWS 1933 $0.62Verizon/Leap Dec 2011 AWS/PCS 1933 $0.60Leap/Verizon Dec 2011 700MHz 722 $1.54

AT&T/NextWave Aug 2012 WCS 2333 $0.35

Sprint/Eagle River Oct 2012 EBS/BRS 2654 $0.21Sprint/Clearwire (final) Jul 2013 EBS/BRS 2654 $0.30T-Mobile/AT&T Jan 2014 700MHz 716 $1.85H Block auction Feb 2014 AWS 1958 $0.50

Frequency Is a Key Driver of Spectrum Valuation


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but precedent pricing shows that frequency is king

Shown on graph: 19 USspectrum transactions from

Apr 2006 to Feb 201416 secondary trades

3 primary FCC auctions

All of the high-pricedtransactions involve low-frequency spectrum

Based on a simpleexponential trend line,GSATs spectrum is worthonly ~$0.25/MHz-pop

~80% less thancurrent stock priceimplies

exponential trend line

GSAT: you are here

Why Does Frequency Matter So Much?


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The frequency effect is real, logical, and grounded in science

Low-frequency radio waves are more able to penetrate through barriersBetter coverage inside buildings

Usable signal over a wider areaWider coverage area per base station fewer base stations lower costs

Magnitude of the benefit varies depending on environment, but effect is exponential

Estimates compiled by one expert (Kostas Liopiros), based on physics and empirics:

High-frequency BRS spectrum (similar to GSATs) worth 10 -44% of 800MHz value

None of This Is News to Industry Insiders


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Many telecom experts view high-frequency spectrum as low-value

Selections from comments section on FierceWireless (July 2, 2014):

Combining Theory and Data


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Viewed correctly, spectrum precedents imply enormous downside

Shown on graph: sameprecedents + theoreticalmodel based on Liopirosstudy

Assumes suburbanenvironment

Dollar value for a givenfrequency benchmarkedto 700MHz auction

Predicted GSAT spectrumvalue: $0.21/MHz-pop

Slightly lower thansimple exponential fit,but similar

Liopiros model not 100%

accurate, but clearly helpsmake sense of the data

GSAT: you are here

exponential trend line

GSAT: you are here

Liopiros model

International Spectrum Pricing: Another Nail in the Coffin


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Global precedents confirm the low value of high-frequency spectrum

If the low- vs. high-frequencyeffect is real, we should seeit outside of the US

...and we do (except pricesare even lower):

Germany

Italy

France

Portugal

Sweden

Denmark

Belgium

Norway

Netherlands

Finland

2013 UK auction (notshown): ~$0.11/MHz-pop for2.6GHz spectrum

Not a Fan of Models? Just Look at the Best Available Comps


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Page 108

GSATs own argument: Clearwire & MSV are the best comps

From a utility perspective a lot of our spectrum abuts Clearwire andSprints spectrum and so it is functionally equivalent. Another swath of ourspectrum abuts MSV and is functionally equivalent there. So again it isnot clear to me why we would have a spectrum value which was

substantially different than others.

Jay Monroe, chairman & CEO of Globalstar, May 7, 2008

What Happened to Clearwire and MSV?


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Page 109

GSATs favorite comps imply that the company is horrendously overvalued

MSVName changed to SkyTerra, acquired by LightSquared

LightSquared bankrupt, spectrum unusable for terrestrial purposesClearwire

Dec. 2012 investor presentation: tried to sell/lease spectrum but failed

Bought by Sprint in July 2013 for $0.30/MHz-pop

Doing the Arithmetic on the Clearwire Comp


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Page 110

The highest and best use of GSATs spectrum implies 80% downside

One subtlety: LTE channel width typically in multiples of 5MHzSo 1.5 MHz of GSATs 11.5 MHz would go to waste

MSS value based on peer valuations (sell-side estimates are similar)

Bandwidth (MHz) 10$ per MHz-pop $0.30US population (mm) 318

MHz-pops 3,180

Implied spectrum value ($mm) 954$MSS value 325

Total EV 1,279$Less: net debt 545

Equity value 733$

Fully diluted shares (mm) 1,185Equity value per share $0.62

% downside -79%

Just Ask Yourself


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Page 111

For spectrum that:

Is restricted to power levels 400x lower than cellular power levels

Is unlikely to ever be considered for cellular usage by the FCCWould require an acquirer to re-locate BAS Channel A10 licensees

Exists in the high frequency 2.4GHz band

Would require exquisitely engineered antennae to prevent self-jamming

Would receive interference from Wi-Fi

Is chained to a money-losing satellite phone business

Who would acquire GSATs spectrum for a price greater than $0?


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How Much Do People Value Better Wi -Fi Anyway?


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Even industry leaders have struggled to monetize Wi-Fi

GSAT bulls must believe that better Wi -Fi via TLPS is very valuable

Either users pay for it themselves, or someone pays for it on their behalf

Either way, users have to ascribe great value to a potentially slightly better Wi-Fiexperience in certain high-utilization areas

Inherently implausible!

Few people are willing to pay for Wi-Fi today

Example: Boingo (WIFI)

Firm with greatest demonstrated ability to monetize Wi-FiNetwork (incl. roaming partners): >1 million commercial hotspots worldwide

Subscribers: 300,000 (y/y growth rate: -4%)

LTM revenue: $112mm

Enterprise value: $225mmOnly ~5% of GSATs valuation

GSAT contributes nothing to key networking tasks: building APs, finding goodlocations, installing APs, marketing to users, getting backhaul

GSATs Valuation Is Ludicrous Relative to Wi -Fi Comps


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Page 114

GSAT EV = 11x the sum of all publicly traded paid Wi -Fi offerings

Source: Capital IQ, Kerrisdale analysis

Wide-Reaching Trend Toward Free Wi-Fi


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Page 115

Wi-Fi increasingly seen as complimentary amenity

Airports

42 out of 52 tracked by Airfarewatchdog now offer some form of free Wi-Fi

JFK, La Guardia, and Newark rolling out free Wi-Fi soon (announced June)Hotels

According to one report, at least 64% of hotels now offering free Wi-Fi

Some attempt to charge for higher- speed premium Wi -Fi with little success

Quick-service restaurants

Starbucks (via Google)McDonalds (via AT&T)

Burger King (via AT&T)

Dunkin Donuts

Panera

Facebook Wi-Fi: log in for free at participating small businesses

More Free Wi-Fi Drives Down Willingness to Pay


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Page 116

Vast majority wouldnt even download an app in exchange for Wi -Fi!

Source: Ruckus Wireless
http://a030f85c1e25003d7609-b98377aee968aad08453374eb1df3398.r40.cf2.rackcdn.com/wp/wp-business-case-for-mso-wifi-deployments.pdfhttp://a030f85c1e25003d7609-b98377aee968aad08453374eb1df3398.r40.cf2.rackcdn.com/wp/wp-business-case-for-mso-wifi-deployments.pdf


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Congestion in Practice, Part 1


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Study by Ofcom (UK FCC) surveying 38 different locations

Overall the available [Wi -Fi] spectrum is not heavily used

High levels of occupancy were rare [T]he bands are not approaching their maximum capacity



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Page 120

Study by Ghent University researchers

Wi-Fi duty cycle (% of time network is active) measured in a range of locations

File transferresults in highest duty cycles while surfing and audio streaming havemedian duty cycles lower than 3.2%

Empirical duty cycles are low across the board



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Page 121

Review by RWTH Aachen and University of Colorado Law School Researchers

There is currently no evidence for pervasive Wi -Fi congestion

This work was motivated by the many claims that Wi-Fi is congested. We triedto understand what this claim might mean, and to test if it was true. We

discovered that there are many ways to characterize wireless congestion, nounanimity on how to characterize service degradation, and little research aboutthe connection between congestion and degradation. We concluded that there

is as yet no hard evidence that congestion is rising to the level that would justifyregulatory action.

The main lesson from this article is that congestion claims are indeedlike the Emperors missing robes . It appears that excessive load is quiterarely observed, and very seldom well documented. Where the appropriate

investment is made in infrastructure, as at the Super Bowl or well-runconference venues, lack of spectrum is not the binding constraint.

Source: de Vries et al., The Emperor Has No Problem: Is Wi-Fi Spectrum Really Congested?

Bulls Underestimate the Challenges of Rolling Out TLPS

l b l ld l l d l
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2241609http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2241609http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2241609http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2241609


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Page 122

GSAT says: Globalstar could implement TLPS almost immediately

But what does implement mean?

Necessary process:1. Manufacture TLPS access points

2. Deploy these TLPS access points

3. Develop customized network operating system to manage APs

4. Convince original equipment manufacturers (e.g. Apple, HTC, Lenovo) to ask theFCC to permit them to update user devices to access Channel 14

5. Receive FCC approval for individual device models

6. Get users to accept software updates

Does this really sound like something that could happen almost immediately?

And how will access point manufacturers, user device makers and others beconvinced that all this is worth their time, effort and investment?

TLPS Logistical Hurdles Clear from GSATs Own Filings


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TLPS requires hardware and software that dont yet exist

GSAT, May 5, 2014: access points = newly manufactured equipment

GSAT, June 4, 2014: access points need to be centrally managedSuch control is critical to the commercial success of this managed service

But the network operating system (NOS) doesnt actually exist yet Development still in very early (Request for Information) stage:

Equipment Authorization: A Big Potential Headache, Part 1


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Page 124

For existing devices, GSAT initially sought permissive change treatment

GSAT petition, November 2012: device makers will use permissive change filingsfor existing devices

Permissive change = less burdensome process than full re-certification



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Page 125

but the FCC (provisionally) said no

FCC NPRM, November 2013: certification, not permissive change!

Cisco rubs it in, May 2014:

GSAT claims it can use permissive change, but:

As recognized by the NPRM, Globalstar is wrong.



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Page 126

The NPRM would require manufacturersto physically re-label each individual TLPS user device!

GSAT to FCC, June 2014: please reconsider!

The Commissionwhether by interpretation, waiver, or rule change, shouldenable original equipment certification grantees to obtain permissive change

authority to upgrade existing consumer devices for Channel 14 operations. As described in Globalstars comments, the re-certification of all consumerdevices receiving the TLPS software update would likely be an extendedprocess and impose substantial and unnecessary costs on consumers,manufacturers, and the Commission. Original grantees would be required to

submit certification filings that include all the exhibits typically required for a newapproval. Telecommunications Certification Body (TCB) or Commissionapproval of these new certification requests could take at least several

months, and then grantees would have to attach new FCC ID labels toevery single consumer device that receives the software update . This

lengthy and burdensome process could discourage manufacturer participationin TLPS and impede the development of this service.



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Even permissive change suffers from a chicken/egg problem

Even less burdensome permissive change filings could be challenging

Only original grantees can request permissive change, not GSAT

Example: iPhone 5 on T- Mobiles network Sep 2012: iPhone 5 released; no T-Mobile model

Apr 2013: T-Mobile announces first ever T-Mobile iPhoneT-Mobile commits to buying billions of dollars worth of devices

Apples FCC filings make clear that T -Mobile iPhone is just the AT&T iPhone with asoftware change, authorized via permissive change filing

Yet Apple choose not to make the filing until it had struck a deal with T-Mobile

GSAT must convince device-makers that TLPS is worth the effort

But TLPS only works if there are available access points!


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History Lesson: The Open Range Misadventure, Part 1

TLPS i Gl b l fi i i


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Open Range was GSATs first attempt at spectrum monetization

TLPS is not Globalstars first attempt to monetize its spectrum

In 2007, Globalstar asked the FCC to let it lease its spectrum to a newly createdcompany, Open Range Communications

Open Range would provide 4G WiMAX to customers in underserved rural areas

History Lesson: The Open Range Misadventure, Part 2

O l f il


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From the same management thats now bringing you TLPS

Open Range was a complete failure:GSAT could not meet FCCs requirements to provide coverage in all 50 states, keep sparesatellites, etc. FCC suspends GSATs terrestrial authority

Open Range was destined for failureOpen Range woefully undercapitalized

WiMAX became a failed concept

Open Range targeted rural customers; CLWR failed even in urban areas

Execution failures: self-interference issues, poor network quality

Open Range only had a thin band of high frequency spectrum to work with

Open Range partially funded with govt -guaranteed debt, cost taxpayers $73m

Just Ask Yourself

I ld h


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In a world where:

Unlicensed Wi-Fi, when available, is already superior to cellular service

Free Wi-Fi is offered by more and more businesses and venues5GHz Wi-Fi is supported by all new devices and will enable far faster peak speedsthan 2.4GHz


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The Satellite Business and GSATs Financial Position

GSAT: Highly Levered, No Earnings


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GSAT has been in dire straits for years

GSAT 10-Year Performance Summary ($mm ) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 TotalRevenue $84.4 $127.1 $136.7 $98.4 $86.1 $64.3 $67.9 $72.8 $76.3 $82.7 $896.7Op. income (3.5) 21.9 15.7 (24.6) (57.7) (53.8) (59.8) (73.2) (95.0) (87.4) (417.5)

Adj. EBITDA 3.6 27.3 33.8 21.8 (14.2) (12.6) (8.5) (6.4) 9.8 11.9 66.5

CF from ops 14.6 13.7 14.6 (7.7) (30.6) (18.4) (23.3) (5.5) 6.9 (6.5) (42.3)

Less: capex 4.0 9.9 107.5 170.0 286.1 324.1 208.4 88.2 57.5 45.3 1,301.0Levered FCF 10.6 3.8 (93.0) (177.7) (316.7) (342.5) (231.7) (93.7) (50.6) (51.8) (1,343.3)

End of periodDebt @ book $3.3 $0.6 $0.4 $50.0 $238.3 $463.6 $664.5 $723.9 $751.0 $669.3Stock price $13.91 $8.00 $0.20 $0.87 $1.45 $0.54 $0.31 $1.75Shares O/S 72.5 83.7 136.6 291.1 310.0 353.1 489.1 844.9

GSATs Satellite Operations Do Not Support Its Debt Load

Sell side valuation of satellite business:


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Absent the spectrum story, GSAT equity is worthless

Sell-side valuation of satellite business:

7.5x EBITDA multiple (arbitrary)

$45mm of EBITDA2014 H1 annualized level: ~$18mm

Thus price target assumes 2.5x increase in satellite-related EBITDA

Result: $338mm EV

Net debt excluding in-the-money convertibles: $545mm

Implied equity value excluding terrestrial uses of spectrum: zero

GSAT Operates under Strict, Detailed Financial Covenants

Minimum Adjusted Consolidated EBITDA under COFACE credit facility:


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GSAT has to massively ramp up its earnings

Minimum Adjusted Consolidated EBITDA under COFACE credit facility:

enormous

increaseneeded


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Consumer Perception of GSAT Products, Part 1


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With a product this weak, no big rebound is in the offing

early termination fee

Consumer Perception of GSAT Products, Part 2


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Globalstar GSAT Presentation Slides Kerrisdale

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